Blanket Daily Wage Hike To Hurt Economy: Thailand Development Research Institute

[webfact]

THAILAND DEVELOPMENT RESEARCH INSTITUTE

Blanket daily wage hike to hurt economy: TDRI

Watcharapong Thongrung

The Nation

BANGKOK: -- The implementation of the Bt300 daily minimum wage throughout the whole country on January 1 could shrink the economy by 2.5 per cent annually and throw one million people out of work, the Thailand Development Research Institute said yesterday.

The wage hike should be implemented in stages to cushion possible impacts, TDRI president Somkiat Tangkivanich said at a seminar hosted by the Industry Ministry on the competitiveness of Thai industries under the wage hike.

The TDRI's study showed that if the government goes ahead with raising wages nationwide while industry has yet to prepare adequately for it, GDP would decline 2.5 per cent every year during the next three to five years, he said. Businesses, especially SMEs in the provinces, will not be able to adapt to the rapid rise in cost, he warned.

The affected industries will reduce hiring by 1 million workers, but the loss would not be severe as some industries still demand workers.

Industries should deploy modern machinery in the production process and spend more on R&D and upgrade labour skills. Labour intensive industries should shift production bases to lower labour cost countries, as wages here would continue to climb since that is part of the populist campaign of political parties to drum up votes.

The government should lift wages step by step to give time to businesses to make adjustments, he added.

Chen Namsirichai, vice chairman of the Federation of Thai Industries, said the government has to support the R&D spending of industry. Labour accounts for 30 per cent of the total cost of labour-intensive industries.

The government piloted the daily wage in seven major provinces in April.

-- The Nation 2012-10-26

[Thai at Heart]

I would love a link to this one.

Yes it has a possible effect, but like this? Flooding half the country's industrial production for 4 months didn't even achieve this.

[jerrysteve]

NOT to Hike the Daily Wage will Hurt the Economy more than a wage Hike.

People will end up buying less as inflation continues to rise increases the cost of goods and services; it always does.

Raising the wages is part of the cost of doing business in forward looking economies.

AND that is the BOTTOM LINE.

URBAN ECONOMICS is a Major Function of Price Theory and it is well substantiated in the Real World.

TDRI has their heads screwed on backwards

Edited October 26, 2012 by jerrysteve

[Thai at Heart]

The thing is, we are taking dollars per day not per hour. It doesn't help that measuring inflation in Thailand is a difficult process. Minimum wage should have been index linked years ago.

[Jitar]

NOT to Hike the Daily Wage will Hurt the Economy more than a wage Hike.

People will end up buying less as inflation continues to rise increases the cost of goods and services; it always does.

Raising the wages is part of the cost of doing business in forward looking economies.

AND that is the BOTTOM LINE.

URBAN ECONOMICS is a Major Function of Price Theory and it is well substantiated in the Real World.

TDRI has their heads screwed on backwards

The article is saying the proposed wage rise is too dramatic. It is not saying there should be no wage adjustment.

Many workers get substantial pay rises, particularly with medium to large employers, increasing wages well above the government inflation figure. Thailand's days of cheap labour are slowly dying.

Some workers in Thailand get no wage rise, especially in temporary or seasonal labouring work. The employers doing this now probably will ignore the new minimum wage anyway.

The governments attempt to make the minimum wage more realistic is positive. However it would be better if done in a more progressive and consistent manner

[asiawatcher]

Whilst the wage parody and a rise is targeted on the minimum wage, in a country with only virtual social security you work or you starve, the 'figure' is simply a vote buyer, and any intelligent person will realise it. But let's work in the area we understand it is supposed to work best. Try maids as an example. Live in Burmese with/without papers getting 5,500-6,500 monthly now say they are entitled to 9,000 a month. This is in no way aligned to the CPI or inflation. A hike of 60+% is not a wage rise any business could handle irrespective of the numbers. Similarly, try explaining logic to the uneducated about offsets like food, electricity and their board? Then at least there should be some modicum of understanding for a marginal increase but not the increases sprouted by the PM.

But factory workers, base labour rates etc across many industries earning around 7,000 per month? The a wage increase to 9,000 would mean upwards of 22% increase. That is where it will hurt business. Bearing in mind the TH300/day is all about protecting the voting low end, it is also a major support structure within Thai industry which is about to go pear shaped.

So PM, yet again, pulling figures out of the air, continuing to be be directed by your criminal brother, and plunging Thailand into a greater problems, have the guts to step down from the post you know nothing about.

[scorecard]

Whilst the wage parody and a rise is targeted on the minimum wage, in a country with only virtual social security you work or you starve, the 'figure' is simply a vote buyer, and any intelligent person will realise it. But let's work in the area we understand it is supposed to work best. Try maids as an example. Live in Burmese with/without papers getting 5,500-6,500 monthly now say they are entitled to 9,000 a month. This is in no way aligned to the CPI or inflation. A hike of 60+% is not a wage rise any business could handle irrespective of the numbers. Similarly, try explaining logic to the uneducated about offsets like food, electricity and their board? Then at least there should be some modicum of understanding for a marginal increase but not the increases sprouted by the PM.

But factory workers, base labour rates etc across many industries earning around 7,000 per month? The a wage increase to 9,000 would mean upwards of 22% increase. That is where it will hurt business. Bearing in mind the TH300/day is all about protecting the voting low end, it is also a major support structure within Thai industry which is about to go pear shaped.

So PM, yet again, pulling figures out of the air, continuing to be be directed by your criminal brother, and plunging Thailand into a greater problems, have the guts to step down from the post you know nothing about.

There's also the very basic point about cost of operation of the business.

I have a close (Thai) relative who works for a 5 star hotel (outside of BKK). All staff have been told that by Jan 1 the total staff must be reduced by 15% and 20% of all managers and supervisors must go.

Manager explained to staff with basic PowerPoint slides that without the cuts the cost of operation will at 1 Jan will mean the hotel cannot compete.

Not surprising, nothing was mentioned about the ROI the owner expects or the current level of profit of the property, but the bottom line is that no business owner is going to invest in anything that doesn't produce an acceptable return.

[tomross46]

Today The Wall Street Journal, in the Heard of the Stret secitin, indicated that, in Thailand indudtrial production was down a whopping 13.7% year on year.

This does not take into consideration the government activities has reduced Thailand for number 1 exporter of rice to number 3.

[Thai at Heart]

Whilst the wage parody and a rise is targeted on the minimum wage, in a country with only virtual social security you work or you starve, the 'figure' is simply a vote buyer, and any intelligent person will realise it. But let's work in the area we understand it is supposed to work best. Try maids as an example. Live in Burmese with/without papers getting 5,500-6,500 monthly now say they are entitled to 9,000 a month. This is in no way aligned to the CPI or inflation. A hike of 60+% is not a wage rise any business could handle irrespective of the numbers. Similarly, try explaining logic to the uneducated about offsets like food, electricity and their board? Then at least there should be some modicum of understanding for a marginal increase but not the increases sprouted by the PM.

But factory workers, base labour rates etc across many industries earning around 7,000 per month? The a wage increase to 9,000 would mean upwards of 22% increase. That is where it will hurt business. Bearing in mind the TH300/day is all about protecting the voting low end, it is also a major support structure within Thai industry which is about to go pear shaped.

So PM, yet again, pulling figures out of the air, continuing to be be directed by your criminal brother, and plunging Thailand into a greater problems, have the guts to step down from the post you know nothing about.

There's also the very basic point about cost of operation of the business.

I have a close (Thai) relative who works for a 5 star hotel (outside of BKK). All staff have been told that by Jan 1 the total staff must be reduced by 15% and 20% of all managers and supervisors must go.

Manager explained to staff with basic PowerPoint slides that without the cuts the cost of operation will at 1 Jan will mean the hotel cannot compete.

Not surprising, nothing was mentioned about the ROI the owner expects or the current level of profit of the property, but the bottom line is that no business owner is going to invest in anything that doesn't produce an acceptable return.

Well there is acceptable and acceptable. The main issue is that after 97, the exporters that stayed in business, got not only a beneficial exchange rate to trade with, but also, wage rates that didn't move in real terms for ages. This wouldn't have happened if it had been written in stone, that minimum should rise by inflation year on year.

When the service levels in the hotel reach terrible, maybe the owner will rehire a few and put the price up a few baht.

[smedly]

Whilst the wage parody and a rise is targeted on the minimum wage, in a country with only virtual social security you work or you starve, the 'figure' is simply a vote buyer, and any intelligent person will realise it. But let's work in the area we understand it is supposed to work best. Try maids as an example. Live in Burmese with/without papers getting 5,500-6,500 monthly now say they are entitled to 9,000 a month. This is in no way aligned to the CPI or inflation. A hike of 60+% is not a wage rise any business could handle irrespective of the numbers. Similarly, try explaining logic to the uneducated about offsets like food, electricity and their board? Then at least there should be some modicum of understanding for a marginal increase but not the increases sprouted by the PM.

But factory workers, base labour rates etc across many industries earning around 7,000 per month? The a wage increase to 9,000 would mean upwards of 22% increase. That is where it will hurt business. Bearing in mind the TH300/day is all about protecting the voting low end, it is also a major support structure within Thai industry which is about to go pear shaped.

So PM, yet again, pulling figures out of the air, continuing to be be directed by your criminal brother, and plunging Thailand into a greater problems, have the guts to step down from the post you know nothing about.

There's also the very basic point about cost of operation of the business.

I have a close (Thai) relative who works for a 5 star hotel (outside of BKK). All staff have been told that by Jan 1 the total staff must be reduced by 15% and 20% of all managers and supervisors must go.

Manager explained to staff with basic PowerPoint slides that without the cuts the cost of operation will at 1 Jan will mean the hotel cannot compete.

Not surprising, nothing was mentioned about the ROI the owner expects or the current level of profit of the property, but the bottom line is that no business owner is going to invest in anything that doesn't produce an acceptable return.

Well there is acceptable and acceptable. The main issue is that after 97, the exporters that stayed in business, got not only a beneficial exchange rate to trade with, but also, wage rates that didn't move in real terms for ages. This wouldn't have happened if it had been written in stone, that minimum should rise by inflation year on year.

When the service levels in the hotel reach terrible, maybe the owner will rehire a few and put the price up a few baht.

your argument is sound except for one thing - Thailand inflation over the last 10 years has been minimal, can't say the same for the next 10 years, this government has ruined Thailand and they don't care, inflation will spiral out of control because as pointed out ear;ier a wage hike of this magnitude without inflation to justify it creates an economic mess of massive preportions, instead of wages following inflation the opposite will happen - inflation will spiral out of control and wages will not keep up, unemployment will rise, cost of living will rise and what you're left with is an increase in poverty, an increase in crime, government borrowing out of control, tourism will decline and you end up with a very unhappy place. Only the poor will suffer in a country were social welfare is none existent - reversing it will be impossible for any future government

[hansnl]

All very nice comments!

Some are good, some are not so good, some are ridiculous.

I agree very much with Smedley.

A raise in daily wages to 300 baht will mean for many businesses in the North and the Northeast, a raise of up to 120 baht a day per person.

It is quite normal to hear people name wages of 100-150 baht a day, over here.

When the government announced the wage raise, prices of many things were raised, many workers were replaced with Vietnam, Birma, Lao and Cambodia people.

And they work for less as the Thai people worked before.

When the actual wage raise will arrive, prices will go up again, and more workers will be replaced.

I guess, a raise of wages can be offset to a raise of production, and that is indeed a very difficult point in Thailand.

As for unemployment numbers, export numbers, tourist numbers, investment numbers, whatever, I tend not to believe governments.

I see that inflation is slowly accelerating, unemployment is on the rise, export is slowly desintegrating, tourist numbers are declining and the amount spent by single tourists is very much lower.

About investment numbers, anybody's guess is as good as mine, I guess......

And yes, people are getting poorer and poorer, while a small segment of the population is getting obscenely rich.

[khunken]

Raising the minimum wage to B300 in one fell swoop is purely a political bribe. There is nothing wrong in raising it but it should be done gradually. Along with this there should be some attempt to raise the level of expertise of low wage employees (& school leavers) by re-training them.

As already mentioned, all that will happen with an ill-thought-out scheme such as this is lay-offs & more hiring of non-Thais below the radar.

[falang07]

There is a solution to this — devaluation of the baht.

[khunken]

There is a solution to this — devaluation of the baht.

If you were here in 1997 you wouldn't advocate any sort of abrupt devaluation. 1997 was disastrous & the BOT is still saddled with huge debts left over from that action.

IMO the Baht will go into slow devaluation mode following the recent interest rate reduction & the government's spiralling debt. Inflation has also started to kick in which will reduce the attractiveness of investment in government bonds & FDI. Additionally, the recently appointed BOT chairman is quite vocal in wanting (interfering with) the Baht to have its value reduced.

[Noistar]

Funny how the election rice policy happened all-but instantly.

Is the minimum wage issue less important because it is difficult for the ruling party to get financial benefit from it.

I'm not an economist. Surely if a business can sustain wage costs of 600bt/day it can employ 3 people at 200bt or 2 at 300bt. The lost employee can't buy things, so businesses suffer.

In a previous thread on this subject, it was pointed out that people on minimum wage would be able to reduce personal debt, NOT buy more to help businesses.

An ill-thought out vote catcher.

Once the PTP have finished with their need for 'rice votes' and 'minimum wage votes', their supporters might eventually see who was meant to benefit.

Then again, probably not.

TIT unfortunately.

[Thai at Heart]

Whilst the wage parody and a rise is targeted on the minimum wage, in a country with only virtual social security you work or you starve, the 'figure' is simply a vote buyer, and any intelligent person will realise it. But let's work in the area we understand it is supposed to work best. Try maids as an example. Live in Burmese with/without papers getting 5,500-6,500 monthly now say they are entitled to 9,000 a month. This is in no way aligned to the CPI or inflation. A hike of 60+% is not a wage rise any business could handle irrespective of the numbers. Similarly, try explaining logic to the uneducated about offsets like food, electricity and their board? Then at least there should be some modicum of understanding for a marginal increase but not the increases sprouted by the PM.

But factory workers, base labour rates etc across many industries earning around 7,000 per month? The a wage increase to 9,000 would mean upwards of 22% increase. That is where it will hurt business. Bearing in mind the TH300/day is all about protecting the voting low end, it is also a major support structure within Thai industry which is about to go pear shaped.

So PM, yet again, pulling figures out of the air, continuing to be be directed by your criminal brother, and plunging Thailand into a greater problems, have the guts to step down from the post you know nothing about.

There's also the very basic point about cost of operation of the business.

I have a close (Thai) relative who works for a 5 star hotel (outside of BKK). All staff have been told that by Jan 1 the total staff must be reduced by 15% and 20% of all managers and supervisors must go.

Manager explained to staff with basic PowerPoint slides that without the cuts the cost of operation will at 1 Jan will mean the hotel cannot compete.

Not surprising, nothing was mentioned about the ROI the owner expects or the current level of profit of the property, but the bottom line is that no business owner is going to invest in anything that doesn't produce an acceptable return.

Well there is acceptable and acceptable. The main issue is that after 97, the exporters that stayed in business, got not only a beneficial exchange rate to trade with, but also, wage rates that didn't move in real terms for ages. This wouldn't have happened if it had been written in stone, that minimum should rise by inflation year on year.

When the service levels in the hotel reach terrible, maybe the owner will rehire a few and put the price up a few baht.

your argument is sound except for one thing - Thailand inflation over the last 10 years has been minimal, can't say the same for the next 10 years, this government has ruined Thailand and they don't care, inflation will spiral out of control because as pointed out ear;ier a wage hike of this magnitude without inflation to justify it creates an economic mess of massive preportions, instead of wages following inflation the opposite will happen - inflation will spiral out of control and wages will not keep up, unemployment will rise, cost of living will rise and what you're left with is an increase in poverty, an increase in crime, government borrowing out of control, tourism will decline and you end up with a very unhappy place. Only the poor will suffer in a country were social welfare is none existent - reversing it will be impossible for any future government

Well 2 or 3 percent is 2or 3 percent but the incremental increases over say 10 years were very generous to business. Let's not also forget that in usd terms in 97, gasoline rocketed which effects just about everything in the country price wise.

Now comes the overwhelming shock because companies were arguably given a benefit to help them through the 97 mess.

I remember a fabulous article in not the nation about workers dancing in the streets about their 3 baht a day increase from 161 to 164 baht. Sort of sums it all up.

http://geomark.wordpress.com/2012/05/03/chart-of-thailand-inflation-for-past-10-years/

It has fluctuated wildly over the last 10 years, over 9% in 2008 to a negative 4% in 2009. That’s the official rate. And yes it does look like it has been flat at a little under 4% for the last couple of years.

Edited October 26, 2012 by Thai at Heart

[bhakta]

This government's catering to the rural and poorer folks to get the votes will surely back fire in time's due course. In the villages of Isaan, lots of farmers have a hard time getting anyone to work these days.

[Thai at Heart]

All very nice comments!

Some are good, some are not so good, some are ridiculous.

I agree very much with Smedley.

A raise in daily wages to 300 baht will mean for many businesses in the North and the Northeast, a raise of up to 120 baht a day per person.

It is quite normal to hear people name wages of 100-150 baht a day, over here.

When the government announced the wage raise, prices of many things were raised, many workers were replaced with Vietnam, Birma, Lao and Cambodia people.

And they work for less as the Thai people worked before.

When the actual wage raise will arrive, prices will go up again, and more workers will be replaced.

I guess, a raise of wages can be offset to a raise of production, and that is indeed a very difficult point in Thailand.

As for unemployment numbers, export numbers, tourist numbers, investment numbers, whatever, I tend not to believe governments.

I see that inflation is slowly accelerating, unemployment is on the rise, export is slowly desintegrating, tourist numbers are declining and the amount spent by single tourists is very much lower.

About investment numbers, anybody's guess is as good as mine, I guess......

And yes, people are getting poorer and poorer, while a small segment of the population is getting obscenely rich.

Well having a minimum wage that companies can get round by importing labor sort of completely defeats the point of it, don't you think

Minimum should be minimum for all labour. This in itself would have pushed wages for dozens of jobs gradually above minimum, and they wouldn't have needed this huge hike

[caughtintheact]

It appears that many are missing the real point of all this. Money in a company is a resource. More importantly it is a scarce resource. Only governments think it grows on trees. When money allocated to buy, say, raw materials, has to go into higher wages because of government coercion, that money cannot be used for raw materials or anything else. It also means that the company is limited in the number of people it can hire. To hire more people, a company must be able to create additional wealth, but how can the company create more wealth if it misallocates its scarce resources? The people who get the minimum wage are those who are usually the poorest and/or have the fewest skills and need the training the most. So although raising the minimum wage does increase pay for some of the least skilled, it does so ONLY for those that already have jobs, while preventing those who need jobs and training from getting any job. The problem with governbment making a policy like this is that the policy targets one group (the low wage worker who already has a job in a company) without any consideration for any other groups, such as people who want work, when it should consider the impact on all groups (for example, 'Sorry, no bonus this year as we had to put the wealth you worked so hard to create into the minimum wage increase.', and that means you can purchase less, which means that other companies will sell less, etc., etc.) . To put it another way,

"Economics really means to look at both the short term and long term impacts of an act or policy AND being able to trace the impacts of the act or policy on all groups, not just one or two. "

Henry Hazlitt, "Economics in One Lesson"

Government policies rarely look at the impact on all groups over a long period of time.

Edited October 26, 2012 by caughtintheact

[h90]

All very nice comments!

Some are good, some are not so good, some are ridiculous.

I agree very much with Smedley.

A raise in daily wages to 300 baht will mean for many businesses in the North and the Northeast, a raise of up to 120 baht a day per person.

It is quite normal to hear people name wages of 100-150 baht a day, over here.

When the government announced the wage raise, prices of many things were raised, many workers were replaced with Vietnam, Birma, Lao and Cambodia people.

And they work for less as the Thai people worked before.

When the actual wage raise will arrive, prices will go up again, and more workers will be replaced.

I guess, a raise of wages can be offset to a raise of production, and that is indeed a very difficult point in Thailand.

As for unemployment numbers, export numbers, tourist numbers, investment numbers, whatever, I tend not to believe governments.

I see that inflation is slowly accelerating, unemployment is on the rise, export is slowly desintegrating, tourist numbers are declining and the amount spent by single tourists is very much lower.

About investment numbers, anybody's guess is as good as mine, I guess......

And yes, people are getting poorer and poorer, while a small segment of the population is getting obscenely rich.

Actually it is impossible to find people who work for 300 Baht in many areas. While in poor N and NE the costs are still lower. I think that is actually a great chance that some businesses get established in the poor areas, as the costs are low there.

With the rise of the Minimum salary this chance is destroyed.

[lockman]

This government's catering to the rural and poorer folks to get the votes will surely back fire in time's due course. In the villages of Isaan, lots of farmers have a hard time getting anyone to work these days.

Agree totally, especially when many paddy owners are old folks 65 and up. Their children often are working elsewhere and they are faced with 300B a day demand they simply cannot afford, so you now are seeing people around me working 3-4-5 days slowing cutting their rice by themselves, threshing some out by hand and bagging that, put on a pushcart and wheeled home. Last year and previously 3-4 people cut, 2 days or so later 2 thresh. Now one and those who want to work have no work so nothing to spend. This sort of increase only hurts the poor and causes inflation afterwards.

[bhakta]

This government's catering to the rural and poorer folks to get the votes will surely back fire in time's due course. In the villages of Isaan, lots of farmers have a hard time getting anyone to work these days.

Agree totally, especially when many paddy owners are old folks 65 and up. Their children often are working elsewhere and they are faced with 300B a day demand they simply cannot afford, so you now are seeing people around me working 3-4-5 days slowing cutting their rice by themselves, threshing some out by hand and bagging that, put on a pushcart and wheeled home. Last year and previously 3-4 people cut, 2 days or so later 2 thresh. Now one and those who want to work have no work so nothing to spend. This sort of increase only hurts the poor and causes inflation afterwards.

This government's catering to the rural and poorer folks to get the votes will surely back fire in time's due course. In the villages of Isaan, lots of farmers have a hard time getting anyone to work these days.

Agree totally, especially when many paddy owners are old folks 65 and up. Their children often are working elsewhere and they are faced with 300B a day demand they simply cannot afford, so you now are seeing people around me working 3-4-5 days slowing cutting their rice by themselves, threshing some out by hand and bagging that, put on a pushcart and wheeled home. Last year and previously 3-4 people cut, 2 days or so later 2 thresh. Now one and those who want to work have no work so nothing to spend. This sort of increase only hurts the poor and causes inflation afterwards.

We are in that situation now, my wife father is 66 and her mother is 70, they do not have the strength any longer to plant and harvest. We are paying someone with machines to plough the fields and to use the machine to harvest, all the neighbors are doing the same because the kids do not want to work on the farm, they want to sit behind a computer screen in an AC office.

[scorecard]

There is a solution to this devaluation of the baht.

Devaluation of the baht for what reason - so you can enjoy something better on your pension?

[scorecard]

All very nice comments!

Some are good, some are not so good, some are ridiculous.

I agree very much with Smedley.

A raise in daily wages to 300 baht will mean for many businesses in the North and the Northeast, a raise of up to 120 baht a day per person.

It is quite normal to hear people name wages of 100-150 baht a day, over here.

When the government announced the wage raise, prices of many things were raised, many workers were replaced with Vietnam, Birma, Lao and Cambodia people.

And they work for less as the Thai people worked before.

When the actual wage raise will arrive, prices will go up again, and more workers will be replaced.

I guess, a raise of wages can be offset to a raise of production, and that is indeed a very difficult point in Thailand.

As for unemployment numbers, export numbers, tourist numbers, investment numbers, whatever, I tend not to believe governments.

I see that inflation is slowly accelerating, unemployment is on the rise, export is slowly desintegrating, tourist numbers are declining and the amount spent by single tourists is very much lower.

About investment numbers, anybody's guess is as good as mine, I guess......

And yes, people are getting poorer and poorer, while a small segment of the population is getting obscenely rich.

Quote from above: "And yes, people are getting poorer and poorer, while a small segment of the population is getting obscenely rich".

How true, and the reality is that this government, with all it's grandstanding about the poor and the wicked elites, etc etc., has never ever said one word about:

- Policies which force some level of sharing of the wealth and to some extent reduce the gap.

- Policies which would create much higher capability for a large % of all Thias, and deliberate infrastruture and investment policies which would create opportunities for a large % of all Thais to have a good quality of life through their own productivity.

Not one word.

Edited October 26, 2012 by scorecard

[scorecard]

All very nice comments!

Some are good, some are not so good, some are ridiculous.

I agree very much with Smedley.

A raise in daily wages to 300 baht will mean for many businesses in the North and the Northeast, a raise of up to 120 baht a day per person.

It is quite normal to hear people name wages of 100-150 baht a day, over here.

When the government announced the wage raise, prices of many things were raised, many workers were replaced with Vietnam, Birma, Lao and Cambodia people.

And they work for less as the Thai people worked before.

When the actual wage raise will arrive, prices will go up again, and more workers will be replaced.

I guess, a raise of wages can be offset to a raise of production, and that is indeed a very difficult point in Thailand.

As for unemployment numbers, export numbers, tourist numbers, investment numbers, whatever, I tend not to believe governments.

I see that inflation is slowly accelerating, unemployment is on the rise, export is slowly desintegrating, tourist numbers are declining and the amount spent by single tourists is very much lower.

About investment numbers, anybody's guess is as good as mine, I guess......

And yes, people are getting poorer and poorer, while a small segment of the population is getting obscenely rich.

Actually it is impossible to find people who work for 300 Baht in many areas. While in poor N and NE the costs are still lower. I think that is actually a great chance that some businesses get established in the poor areas, as the costs are low there.

With the rise of the Minimum salary this chance is destroyed.

Interesting discussion point.

In some states in India, government must first approve new investment / establishment of new companies / factories, etc., then the gov't of that state also dictates where the factory etc., must be located, to try to spread job creation.

Further some states also approve various subsidies to ensure profitability, sustainabiility, etc. Corruption and collusion of course never far away, but in principle an idea which is worth discussion.

[bhakta]

There is a solution to this — devaluation of the baht.

Devaluation of the baht for what reason - so you can enjoy something better on your pension?

There is a solution to this — devaluation of the baht.

Devaluation of the baht for what reason - so you can enjoy something better on your pension?

We lived through devaluation in 1997, and it is useless. It is a temporary gimmick, relief that is shortlived. Living within one's means with sober self control if the long term way to prosperity.

[Thai at Heart]

All very nice comments!

Some are good, some are not so good, some are ridiculous.

I agree very much with Smedley.

A raise in daily wages to 300 baht will mean for many businesses in the North and the Northeast, a raise of up to 120 baht a day per person.

It is quite normal to hear people name wages of 100-150 baht a day, over here.

When the government announced the wage raise, prices of many things were raised, many workers were replaced with Vietnam, Birma, Lao and Cambodia people.

And they work for less as the Thai people worked before.

When the actual wage raise will arrive, prices will go up again, and more workers will be replaced.

I guess, a raise of wages can be offset to a raise of production, and that is indeed a very difficult point in Thailand.

As for unemployment numbers, export numbers, tourist numbers, investment numbers, whatever, I tend not to believe governments.

I see that inflation is slowly accelerating, unemployment is on the rise, export is slowly desintegrating, tourist numbers are declining and the amount spent by single tourists is very much lower.

About investment numbers, anybody's guess is as good as mine, I guess......

And yes, people are getting poorer and poorer, while a small segment of the population is getting obscenely rich.

Actually it is impossible to find people who work for 300 Baht in many areas. While in poor N and NE the costs are still lower. I think that is actually a great chance that some businesses get established in the poor areas, as the costs are low there.

With the rise of the Minimum salary this chance is destroyed.

Interesting discussion point.

In some states in India, government must first approve new investment / establishment of new companies / factories, etc., then the gov't of that state also dictates where the factory etc., must be located, to try to spread job creation.

Further some states also approve various subsidies to ensure profitability, sustainabiility, etc. Corruption and collusion of course never far away, but in principle an idea which is worth discussion.

If the company head office is in bangkok, the provinces don't get their fair share irrespective. And basically every company of any significance pays it's taxes in bangkok.

Otherwise, by now rayong would be paradise.

Edited October 26, 2012 by Thai at Heart

[jackr]

Raising the wages is part of the cost of doing business in forward looking economies.

AND that is the BOTTOM LINE.

URBAN ECONOMICS is a Major Function of Price Theory and it is well substantiated in the Real World.

The bottom line is this was all done for votes, period. A forward-thinking economy in the 'real world' does not increase the wage by a big percentage in one fell swoop. People will not have more money in their pocket as everything will rise in-kind. The ones that'll suffer will be those unfortunates who don't get a rise (it will happen), those out of work, and those about to get the boot because companies can no longer afford to keep on the obligatory foot-shufflers. It's irresponsible, wholly indicative of the prats at the top--who couldn't give a monkey's chuff about the poor man on the street--and will <<Snip!>> this country good and proper.

Edited October 26, 2012 by metisdead
: Profanity

[Thai at Heart]

Raising the wages is part of the cost of doing business in forward looking economies.

AND that is the BOTTOM LINE.

URBAN ECONOMICS is a Major Function of Price Theory and it is well substantiated in the Real World.

The bottom line is this was all done for votes, period. A forward-thinking economy in the 'real world' does not increase the wage by a big percentage in one fell swoop. People will not have more money in their pocket as everything will rise in-kind. The ones that'll suffer will be those unfortunates who don't get a rise (it will happen), those out of work, and those about to get the boot because companies can no longer afford to keep on the obligatory foot-shufflers. It's irresponsible, wholly indicative of the prats at the top--who couldn't give a monkey's chuff about the poor man on the street--and will &lt;deleted&gt; this country good and proper.

They have stored this problem up for 10 or more years.

[falang07]

Devaluation of the Baht can help boost export in case wages rise like this. People will be able to buy more locally produced goods (or at least the same amount as before due to the inflation triggered by this wage hike) and at the same time the export price will stay the same (higher in THB, but same or even lower in USD, EUR, etc.). Simple as that.